Report to Congressional Committees

United States General Accounting Office

GAO

December 2001 WELFARE REFORM

Competitive Grant

Selection Requirement

for DOT’s Job Access

Program Was Not

Followed

GAO-02-213
Page i GAO-02-213 Welfare Reform

Letter 1

Results in Brief 3

Background 5

FTA Noncompetitively Selected Most Job Access Projects for

Fiscal Years 2000 and 2001 6

DOT’s Response to Conference Reports Decreased Opportunities

to Fund Potentially More Promising Projects 8

FTA’s Process for Selecting Grantees in Fiscal Years 2000 and 2001

Was Not Consistent With TEA-21 10

Conclusion 12

Recommendation 13

Agency Comments and Our Evaluation 13

Scope and Methodology 15

Appendix I Brief Description of Previous GAO Reports on

the Job Access Program 17

Appendix II Objectives, Scope, and Methodology 19

Appendix III Survey of Fiscal Year 1999 Access to Jobs Program

Grant Recipients

Appendix IV GAO Contact and Staff Acknowledgments 27

GAO Contact 27

Acknowledgments 27

Abbreviations

DOT Department of Transportation

FTA Federal Transit Administration

FY Fiscal year

TEA-21 Transportation Equity Act for the 21st Century

Contents
Page 1 GAO-02-213 Welfare Reform

December 7, 2001

The Honorable Paul S. Sarbanes

Chairman

The Honorable Phil Gramm

Ranking Minority Member

Committee on Banking, Housing,

 and Urban Affairs

United States Senate

The Honorable Don Young

Chairman

The Honorable James L. Oberstar

Ranking Democratic Member

Committee on Transportation

 and Infrastructure

House of Representatives

Without adequate transportation, welfare recipients face significant

barriers in moving from being on welfare to working. In 1998, Congress

found that three-fourths of welfare recipients lived in central cities or rural

areas, but two-thirds of new, entry-level jobs were located in the suburbs.

Public transportation facilities, such as buses or subways, often offer

limited or no access to many of these jobs. Although the jobs can be

reached by car, many welfare recipients do not have cars. To address this

mismatch, the Transportation Equity Act for the 21st Century (TEA-21)

authorized up to $750 million for fiscal years 1999 through 2003 for the Job

Access and Reverse Commute (Job Access) program. The program

authorizes the Department of Transportation (DOT) to provide grants to

local agencies, nonprofit organizations, transit authorities, and others to

improve transportation to employment sites. Within DOT, the Federal

Transit Administration (FTA) is responsible for implementing the

program. TEA-21 requires DOT to conduct a nationwide solicitation for

Job Access grant applications and to select grantees on a competitive

basis.

The competitive selection process, as implemented by FTA, includes

evaluating and scoring grant applications under published criteria that are

based on factors identified in TEA-21. FTA then ranks the applications and

selects them for funding, based on their scores. FTA considers projects to

be “meritorious” if they score high enough to warrant selection and

United States General Accounting Office

Washington, DC 20548
Page 2 GAO-02-213 Welfare Reform

funding under the program. From fiscal year 1999 through 2001, FTA

selected 368 Job Access projects for grants totaling $247 million.

To date, we have issued four reports on the Job Access program: in May

1998, before it was established,1

 as well as in November 1999,2 December

2000,3

 and August 2001.4 Appendix I contains a brief description of these

four reports.5

 This report, our fifth on the Job Access program, examines

• how DOT implemented the Job Access program in fiscal years 2000 and

2001, including its response to funding designations for specific states,

localities, and organizations set forth in conference reports accompanying

DOT’s fiscal year 2000 and 2001 appropriations acts;

• the impact on the program of DOT’s response to the funding designations;

and

• whether the manner in which DOT interpreted and applied the conference

reports’ funding designations in fiscal years 2000 and 2001 was consistent

with applicable statutory requirements.

To meet these objectives, we interviewed FTA officials, examined program

documentation, and conducted a mail survey of all of the fiscal year 1999

Job Access program grantees. We also reviewed TEA-21, the

appropriations acts for fiscal years 2000 and 2001, and applicable case law;

further, we sent a letter of inquiry to FTA to obtain its explanation of the

actions taken in response to the designations in the conference reports

that accompanied DOT’s appropriations acts for fiscal years 2000 and

2001. Our review focused on FTA’s processes for implementing the Job

Access program, rather than on individual grants made in fiscal years 1999,

2000, or 2001.

 1 Welfare Reform: Transportation’s Role in Moving from Welfare to Work

(GAO/RCED-98-161, May 29, 1998).

2 Welfare Reform: Implementing DOT’s Access to Jobs Program in Its First Year

(GAO/RCED-00-14, Nov. 26, 1999).

3 Welfare Reform: DOT Is Making Progress in Implementing the Job Access Program

(GAO-01-133, Dec. 4, 2000).

4 Welfare Reform: GAO’s Recent and Ongoing Work on DOT’s Access to Jobs Program

(GAO-01-996R, Aug. 17, 2001).

5

 TEA-21 requires that we report to the Congress on FTA’s implementation of the program.
Page 3 GAO-02-213 Welfare Reform

In response to language in the conference reports accompanying DOT’s

fiscal year 2000 and 2001 appropriations acts that designated significant

Job Access funds for specific states, localities, and organizations, FTA

adopted a two-track process for the selection of Job Access grantees. FTA

instituted a noncompetitive process for entities identified in the

conference reports, or applicants selected by those entities; FTA set aside

funds for those entities and selected them without scoring and ranking

their applications—that is, comparing them to those submitted by other

applicants. FTA continued to implement the previously established

competitive process for other applicants. Of the $175 million made

available for the program for these 2 years, FTA allocated $125 million for

projects selected under the noncompetitive process, after it determined

they had met selection criteria, such as demonstrating the need for

additional Job Access services in the area to be served by the project. In

fiscal year 2000, FTA allocated $50 million to projects selected under the

noncompetitive process and the remaining $25 million under the

competitive process to proposals submitted in that year. In fiscal year

2001, FTA allocated $75 million to projects selected under the

noncompetitive process; it allocated the remaining $25 million to

proposals submitted in fiscal year 2000 under the competitive process that

were not funded or only partially funded in that year. FTA did not solicit

any proposals in fiscal year 2001.

FTA’s two-track process for the selection of Job Access grantees

decreased opportunities to fund projects that could have been identified

as “meritorious” through the competitive selection process. This approach

reduced the amounts available for projects selected on a competitive basis

from $75 million in fiscal year 1999 to an average of about $25 million a

year in fiscal years 2000 and 2001. FTA had designed its competitive

selection process to help ensure that the projects selected for funding

would best achieve the program’s objectives. The exclusion of significant

Job Access funds from the competitive selection process decreased FTA’s

ability to fund projects that might have emerged from this process as the

most promising in meeting the program’s objectives. According to the

Coordinator of the Job Access program and other FTA officials, the

funding of projects for entities designated in the conference reports

resulted in reduced opportunities to fund other worthy projects that were

not designated in the reports. Also, FTA’s decision not to solicit new

project proposals for competition for program funding in fiscal year

2001—but instead to select from project proposals submitted in fiscal

2000—foreclosed opportunities to select projects that FTA may have

found more promising than those actually selected in fiscal year 2001.

Moreover, grantees reported that the reduction in funds available for

Results in Brief
Page 4 GAO-02-213 Welfare Reform

competitive award resulted in a discontinuation of funding for some Job

Access projects that had been selected on a competitive basis in fiscal year

1999. Specifically, according to our survey of fiscal year 1999 Job Access

grantees, as of September 30, 2001, 19 percent of them did not receive

additional funding or received decreased funding in fiscal years 2000 and

2001.

TEA-21 requires that Job Access grantees be selected on a competitive

basis. FTA’s allocation of Job Access funds on a noncompetitive basis to

entities designated in conference reports, or applicants selected by those

entities, was not consistent with TEA-21. Although the conference reports

that accompanied DOT’s fiscal year 2000 and 2001 appropriations acts

designated Job Access funds for certain entities, these designations were

not carried over into the appropriations acts for those years. Furthermore,

the conference reports did not impose legally binding requirements and

did not provide FTA with a legal basis to deviate from the requirements of

TEA-21. Therefore, FTA’s use of a noncompetitive process for the

selection of Job Access grantees in fiscal years 2000 and 2001 was not

authorized. This report contains a recommendation to the Secretary of

Transportation to ensure that grants to entities designated in future

conference reports are made on a competitive basis.

In providing comments on our report, DOT officials disagreed with our

finding that FTA awarded grants to entities designated in conference

reports using a noncompetitive process. They explained that FTA

employed separate competitive selection processes in fiscal years 2000

and 2001 for evaluating applications received from entities designated in

the conference reports and other applicants, but that both pools of

applicants were required to meet all statutory criteria for award. In their

view, both selection methods represented a reasonable exercise of agency

discretion in complying with the statutory requirement for competitive

selection, while considering congressional views as expressed in

appropriations report language. We disagree that FTA employed

competitive methods in selecting all Job Access grantees during this

period or that its two-track approach for selecting Job Access grantees

represented a reasonable exercise of agency discretion. A competitive

selection process necessarily requires a comparison of applications for

available funding against each other, rather than a mere determination that

they meet the criteria for award. FTA did not score or rank applications

from entities designated in the conference reports accompanying the fiscal

year 2000 and 2001 appropriations acts and did not compare them either to

each other or to applications from entities that were not so designated.

Therefore, DOT has not provided us with any basis to agree with its view
Page 5 GAO-02-213 Welfare Reform

that projects for entities identified in the conference reports were

competitively selected or to change our recommendation.

TEA-21 authorized the Job Access program, through which DOT’s FTA

provides grants to “qualified entities”—local agencies, nonprofit

organizations, transit authorities, and others—to improve the mobility of

welfare recipients and low-income individuals seeking employment.6

DOT’s two major goals for the program are to (1) provide transportation

services in urban, suburban, and rural areas to assist welfare recipients

and low-income individuals to gain access to employment opportunities

and (2) increase collaboration among such parties as transportation

providers, human service agencies, employers, metropolitan planning

organizations, states, and communities in providing access to employment.

TEA-21 requires DOT to conduct a nationwide solicitation for Job Access

grant applications and to select grantees on a competitive basis.7

 TEA-21

also identifies factors for DOT to consider in awarding Job Access grants.

These include the percentage of the population in the area to be served by

a grant applicant who are welfare recipients, the need for additional

services in the area to be served, the extent to which the proposed

services would meet that need, and the extent to which an applicant

identifies long-term financing strategies to support the services. In fiscal

year 1999, FTA established a competitive selection process involving the

evaluation of grant applications against published criteria, as well as the

scoring and ranking of applications against each other on the basis of

those evaluations. FTA selected and funded the highest ranked projects.

FTA selects program grantees on an annual basis and makes no

commitment for funding for more than 1 year. As a result, FTA undertakes

a new selection process every year.

Under TEA-21, Job Access grants are subject to the terms and conditions

applicable to recipients of urbanized area formula grants, as well as other

terms and conditions established by DOT. After selecting projects for

funding, FTA requires the applicants to provide assurances and

 6

 For areas with populations of 200,000 or more, the metropolitan planning organizations

screen applications and selects qualified entities. States perform the same function for

areas with populations of fewer than 200,000. A metropolitan planning organization is an

organization that carries out federally funded transportation planning activities.

7

 TEA-21 does not define the phrase “competitive basis.”

Background
Page 6 GAO-02-213 Welfare Reform

documentation of compliance with these standard grant requirements,

such as those concerning drug and alcohol testing, federal procurement

standards, and state and regional transportation planning.

TEA-21 authorized up to $750 million for the program from fiscal year 1999

through fiscal year 2003.8

 It also required DOT to allocate 60 percent of the

program’s funds each year to projects in urban areas with populations of

at least 200,000; 20 percent of the funds to projects in urban areas with

populations of less than 200,000; and 20 percent of the funds to projects in

nonurban areas.9

 Job Access grantees are required to provide at least 50

percent matching funds from other sources, including other federal funds

available for transportation services—for example, funds from the

Temporary Assistance for Needy Families program.

In response to funding designations contained in the conference reports

accompanying DOT’s appropriations acts for fiscal years 2000 and 2001,

FTA changed its selection process and adopted a two-track process for the

selection of Job Access projects. Specifically, FTA adopted a

noncompetitive process for the entities designated in the conference

reports or applicants selected by those entities. FTA set aside funding for

the designated entities and selected them without scoring and ranking

their applications—that is, comparing them to those submitted by other

applicants. FTA continued to implement its existing competitive process

for other applicants. In fiscal years 2000 and 2001, FTA selected 199

projects for grants totaling $125 million on the basis of their designations

in conference reports, rather than on the basis of its competitive review. 10

According to FTA officials, the agency had determined that these projects

met the program’s basic requirements and its selection criteria for

 8

 Some of the Job Access program funds are “guaranteed,” that is, subject to a procedural

mechanism designed to ensure that minimum amounts of funding are made available each

year. TEA-21 provided guaranteed funding of $50 million for fiscal year 1999, $75 million

for fiscal year 2000, $100 million for fiscal year 2001, $125 million for fiscal year 2002, and

$150 million for fiscal year 2003.

9

 These funding limitations were not applicable to the program in fiscal year 2001.

10 FTA selects program grantees on an annual basis. One hundred fifteen (115) of the 199

projects selected noncompetitively had been competitively evaluated, scored, and ranked

in fiscal year 1999 or fiscal year 2000. The remaining 84 projects had never been

competitively evaluated, scored, and ranked. According to the Coordinator of the Job

Access program and other FTA officials, none of the 199 projects were selected for funding

based on competitive evaluation, scoring, and ranking against other applicants.

FTA

Noncompetitively

Selected Most Job

Access Projects for

Fiscal Years 2000 and

2001
Page 7 GAO-02-213 Welfare Reform

competitively awarded grants. These 199 projects comprised about 61

percent of the 327 projects selected for grants during those 2 years and

about 71 percent of the $175 million that was made available for the

program during those 2 years.

The Department of Transportation and Related Agencies Appropriations

Act for fiscal year 200011 provided $75 million for the Job Access program,

and the conference report accompanying the appropriations act

designated a total of $49.6 million in specified amounts for grants to

identified states, localities, and other organizations.12 FTA’s March 2000

request for project proposals provided detailed information to prospective

grantees, including requirements for eligibility and guidelines for preparing

grant applications.13 It also set forth selection processes for entities

identified in the conference report and other applicants, stating that

Congress had allocated $49.6 million for specific states and localities and

that the remaining $25.4 million, along with about $4 million in unobligated

fiscal year 1999 funds, was available for competitive award.

FTA instructed entities identified in the conference report, or applicants

selected by those entities, to submit applications responding to the same

program selection criteria, including conformity with program

requirements, as applicants for competitive awards.14 In addition, it

advised applicants for “competitive grants” that—as in 1999—it would

evaluate and score eligible applications according to four factors: (1) the

degree of local coordination exhibited when a project was designed, (2)

the demonstrated need for additional transportation services, (3) the

extent to which proposed services would meet the need, and (4) the ability

of an applicant to obtain resources to continue a project without grant

funds. The notice indicated that, along with such factors as the time frame

for implementation and the geographic distribution of project funding,

these award criteria would provide the basis for project selections.

 11 P.L. No. 106-69, 113 Stat. 986, 1001, 1012 (1999).

12 H.R. Conf. Rep. No. 106-355, at 112-113 (1999).

13 65 Fed. Reg. 13210 (2000).

14 Id. According to FTA, if the conference report did not designate a specific organization to

receive funding, the area to which funds were assigned designated applicants. In urbanized

areas with populations of 200,000 or more, applicants were selected by the metropolitan

planning organizations, which are organizations that implement federally funded

transportation plans and programs. In areas with populations of fewer than 200,000,

applicants were selected by the states.
Page 8 GAO-02-213 Welfare Reform

The Department of Transportation and Related Agencies Appropriations

Act for fiscal year 200115 provided $100 million for the Job Access program,

and the accompanying conference report designated about $75 million for

identified states, localities, and other organizations.16 As in 2000, FTA

proposed to allocate amounts to entities identified in the conference

report for projects meeting basic program requirements, stating that it

would “honor those allocated projects that meet the statutory intent of the

program.”

17 However, it did not solicit new proposals for competitive

award; rather, it decided to make remaining selections from among

proposals submitted in fiscal year 2000 that were not funded or only

partially funded due to funding limitations in that year.

According to FTA, applicants for projects designated in the conference

reports were notified by letter from the FTA regional administrators, as

well as through its published notices, and instructed to submit project

proposals addressing the criteria used for competitive awards, as well as

standard FTA grant requirements. FTA officials noted that only those

applications meeting the basic eligibility criteria for the Job Access

program were awarded grants, explaining that FTA’s practice is to work

with entities identified in the conference reports and include them in the

program consistent with the underlying statutory requirements.

During fiscal years 2000 and 2001, FTA’s two-track process for the

selection of Job Access grantees decreased opportunities to fund projects

that could have been identified as meritorious through the competitive

evaluation process. Also, some projects selected in fiscal year 1999 were

not selected for funding in fiscal years 2000 or 2001. As a result, according

to grantee officials, some of these projects needed to reduce their services

or ceased to operate.

 15 P.L. No. 106-346, 114 Stat. 1356, 1356A-16,1356A-20 (2000).

16 H.R. Conf. Rep. No. 106-940, at 140-141 (2000).

17 66 Fed. Reg. 4900, 4911 (2001).

DOT’s Response to

Conference Reports

Decreased

Opportunities to Fund

Potentially More

Promising Projects
Page 9 GAO-02-213 Welfare Reform

In response to TEA-21, FTA designed a competitive process consistent

with the factors identified in the statute to help ensure that the projects

selected for funding would improve the access of low-income individuals

to employment and employment-related services through coordinated

efforts of transportation providers, human service agencies, and others. In

fiscal year 1999, FTA allocated all of the program funds—$75 million—for

projects that it had competitively selected by evaluating, scoring, and

ranking them against each other.18 However, for fiscal years 2000 and 2001,

FTA allocated $125 million out of the $175 million available to entities

identified in the conference reports, or applicants selected by those

entities, and only $50 million to competitively selected entities that were

not identified in the conference reports. According to the Coordinator of

the Job Access program and other program officials, as a result of funding

projects designated in the conference reports, many other worthy projects

could not be funded.

In fiscal year 2001, FTA did not solicit new proposals. Instead, it selected

projects from among project proposals submitted for fiscal year 2000 that,

according to FTA, were “meritorious” but had not been funded or had

been only partially funded because of funding limitations. This change

foreclosed opportunities for FTA to consider projects in fiscal year 2001

that may have been more promising than those actually selected in that

year. In addition, FTA decreased the minimally acceptable score for

project selection from 76.5 ranking points to 54.5 points. As a result, in

fiscal year 2001, FTA selected some projects that it had evaluated and

ranked in fiscal year 1999 or 2000 but had not found suitable for award in

those years.

According to FTA program officials and grantees, the decrease in funding

for competitively selected projects during fiscal years 2000 and 2001 meant

that about one-fifth of the fiscal year 1999 Job Access projects did not

receive continued funding. To explore the impact of the reduction in

funding available for competitive grants, we sent a questionnaire to 186

fiscal year 1999 grantees. About 83 percent of these grantees—or 155—

responded to our questionnaire. These respondents generally indicated

they were satisfied or very satisfied with the Job Access program. Eightyfive percent said that they were satisfied with how the Job Access program

 18 Congress provided $75 million for the program for fiscal year 1999. FTA awarded $71

million in that year and the remaining $4 million in fiscal year 2000.

Opportunities for

Competitive Awards Were

Significantly Decreased in

Fiscal Years 2000 and 2001

Some Projects Funded in

Fiscal Year 1999 Did Not

Receive Additional Job

Access Funding
Page 10 GAO-02-213 Welfare Reform

has enabled their organization to help people get to work. However, 19

percent of the respondents—or 30 of them—faced reduced or

discontinued funding during fiscal years 2000 and 2001. Furthermore, eight

grantees reported that funding interruptions caused them to decrease the

scope of service of their projects. For example, the Chesapeake Bay

Agency on Aging (Urbanna, VA) reported that funding disruptions,

accompanied by an inability to secure funding from alternative sources,

resulted in some route cancellations and cutbacks in the number of riders

served and the lengths of some routes. The Chesapeake Bay Agency on

Aging and the Richmond (VA) Transit Authority stated that these service

disruptions caused a loss of credibility with their clientele and cost some

passengers their jobs. Three grantees that reported funding lapses said

that, after their services were interrupted, they could not obtain alternative

sources of funding, and their Job Access projects were permanently

discontinued.

In fiscal years 2000 and 2001, FTA selected 199 projects (about 61 percent

of the 327 Job Access projects selected in those years) noncompetitively,

based on language in the conference reports that accompanied the fiscal

year 2000 and 2001 appropriations acts. This language designated specific

dollar amounts for grants to states, localities, and organizations. FTA

officials said that in administering the program, FTA complied with

applicable statutory requirements for nationwide solicitation and

competitive selection, while taking into account congressional views as

expressed in this report language.

Section 3037 of TEA-21, which established the Job Access program,

authorizes the Secretary of Transportation to make grants to assist

qualified entities with financing eligible projects.19 It directs the Secretary

to conduct a national solicitation for grant applications, and it requires

that grantees be selected on a competitive basis.20 Although the statute

does not define the phrase “competitive basis,” it does identify several

factors for the Secretary to consider in awarding grants, including the

percentage of welfare recipients in the population of the area to be served,

the need for additional services, and the degree of coordination with

 19 Section 3037(b) defines the terms “access to jobs project,” “reverse commute project,”

and “qualified entity,” thus establishing the basic eligibility requirements for participation

in the program and the pool of potential applicants.

20 See section 3037(g).

FTA’s Process for

Selecting Grantees in

Fiscal Years 2000 and

2001 Was Not

Consistent With TEA21
Page 11 GAO-02-213 Welfare Reform

existing transportation service providers.21 In implementing TEA-21, FTA

combined the statutory factors into the four essential elements referenced

in its March 2000 request for grant applications and assigned points to

each, on the basis of relative importance. In December 2000,22 we

concluded that FTA’s program guidance and practices of evaluating and

comparing program applicants were appropriate for helping to ensure that

grantees would be competitively selected on a consistent basis.23

The fiscal year 2000 and 2001 appropriations acts for the Department of

Transportation and Related Agencies made specified amounts available

for the award of Job Access grants under section 3037. Although the

conference reports accompanying those acts contained language

designating entities for project funding, the designations were not carried

over into the appropriations acts.24 It is well established that conference

report language and other legislative history, indicating how funds should

be spent, do not impose legally binding requirements;25 nor does legislative

history supersede or repeal existing statutory requirements.26 Accordingly,

FTA had no authority to use a noncompetitive process for the selection of

Job Access grantees, including those designated in the conference reports.

 21 See section 3037(f).

22 GAO-01-133, Dec. 4, 2000.

23 For our December 2000 report on the Job Access program, we reviewed changes made to

the competitive selection process after fiscal year 1999—the first year of the program.

24 Statutory language designating portions of a lump-sum amount for particular purposes

are commonly referred to as earmarks.

25 See, e.g., Lincoln v. Vigil, 508 U.S. 182, 193 (1993)(observing that “Congress may always

circumscribe agency discretion to allocate resources by putting restrictions in the

operative statutes (though not... just in the legislative history)”); Tennessee Valley

Authority v. Hill, 437 U.S. 153, 191 (1978)(holding that a substantive statutory provision

was not amended or repealed by language in a subsequent appropriation committee report

on the grounds that “expressions of committees dealing with requests for appropriations

cannot be equated with statutes enacted by Congress”); 55 Comp. Gen. 307, 319

(1975)(emphasizing that when the Congress appropriates amounts without statutorily

restricting what can be done with those funds, a clear inference arises that it does not

intend to impose legally binding restrictions).

26 64 Comp. Gen. 282 (1985)(holding that spending levels established for fiscal year 1984 in

authorizing legislation for three Small Business Administration (SBA) loan programs were

not superseded or repealed by higher levels indicated in tables contained in the conference

report accompanying SBA’s fiscal year 1984 appropriation).
Page 12 GAO-02-213 Welfare Reform

In response to our inquiries concerning FTA’s legal justification for its

practices in fiscal years 2000 and 2001, FTA officials emphasized that—

notwithstanding the designations in the conference reports—only those

applications meeting the eligibility criteria in section 3037 were awarded

grants and that projects of questionable eligibility were specifically

reviewed by the Office of Chief Counsel to ensure eligibility. FTA officials

also said that the selection of Job Access projects reflected the

requirement of section 3037 to allocate 60 percent of the available funds to

large urban areas, 20 percent to mid-sized urban areas, and 20 percent to

rural areas.27 According to Job Access program officials, including the

Coordinator, FTA determined how many of the projects from entities

identified in the conference reports fell into each funding category. FTA

set aside funds for these projects in anticipation of awarding them grants.

FTA then awarded grants with the remaining funds in each funding

category to projects selected under the competitive process. FTA

acknowledged that it did not undertake any effort to compare applications

from entities identified in the conference reports to other applications for

Job Access funds. While TEA-21 does not define “competitive basis,”

competition necessarily requires the evaluation and comparison of

applications for limited funding against other applications before making

selections.

We have not assessed individual projects selected for Job Access grants in

fiscal years 2000 and 2001 for compliance with program eligibility

requirements or FTA’s processes for compliance with overall funding

limitations. Thus, while we have determined that FTA’s two-track process

for the award of Job Access grants did not conform to the statutory

requirement to select grantees on a competitive basis, we have no basis to

conclude that any specific grants, including those made as a result of

conference report language, failed to satisfy the basic eligibility criteria or

were otherwise not worthy of funding. In this respect, FTA has

acknowledged the importance of ensuring that all grants, including grants

to entities designated in conference reports, meet the requirements of the

Job Access program.

In response to language in conference reports that accompanied DOT’s

fiscal year 2000 and fiscal year 2001 appropriations acts, FTA implemented

a noncompetitive selection process for entities designated in those

 27 These funding limitations were not applicable to fiscal year 2001.

Conclusion
Page 13 GAO-02-213 Welfare Reform

reports, or applicants selected by those entities. At the same time, FTA

sought to satisfy the requirements of TEA-21 by continuing to use a

competitive process for grant applicants not designated in the conference

reports. The noncompetitive process implemented by FTA did not satisfy

the requirements of section 3037 of TEA-21. In addition, FTA’s manner of

implementing the program in fiscal years 2000 and 2001 decreased its

opportunities to select projects that were potentially more promising.

We recommend that, in the absence of statutory authority to select Job

Access grantees on a noncompetitive basis, the Secretary of

Transportation ensure that future grants to entities designated in

conference reports, including grants to applicants selected by those

entities, be made on a competitive basis.

We provided copies of the draft report to the Department of

Transportation for review and comment. DOT officials, including the

Coordinator of the Job Access program and representatives from FTA’s

Chief Counsel’s office provided verbal comments regarding our draft

report. Overall, DOT officials stated that in implementing the program,

FTA complied with applicable statutory requirements for nationwide

solicitation and competitive selection, while taking into account

congressional views as expressed in appropriations report language.

According to DOT officials, TEA-21 requires DOT to (1) conduct a

nationwide solicitation for Job Access grant applications, and (2) select

grantees on a competitive basis. According to DOT officials, FTA solicited

applications through a broad agency announcement published in the

Federal Register, and letters addressed to entities identified in

appropriations report language. DOT agrees that report language and

other legislative history indicating how funds should be spent do not

impose legally binding requirements, nor supersede or repeal statutory

requirements. However, it also emphasizes that the statutory language

does not define the term “competitive selection,” leaving that to agency

discretion. According to DOT officials, the agency employed separate

competitive selection processes in fiscal years 2000 and 2001 for

evaluating applications received in response to the different solicitation

methods. DOT indicated that both pools of applicants were required to

meet all statutory criteria for award. DOT maintains that both selection

methods were competitive and represent a reasonable exercise of agency

discretion in complying with applicable statutory requirements for

nationwide solicitation and competitive selection, while taking into

Recommendation

Agency Comments

and Our Evaluation
Page 14 GAO-02-213 Welfare Reform

account congressional views, as expressed in appropriations report

language.

DOT also stated that the draft report could benefit by more fully

discussing the results of GAO’s survey. For example, DOT noted that

85 percent (132 of 155 respondents) were satisfied with the program, while

12 percent (19 of 155) had no opinion, and only 3 percent (4 of 155) were

dissatisfied. DOT maintains that this high level of satisfaction among its

partners clearly demonstrates FTA’s effective implementation of this very

important program.

We agree that Congress left the determination of exactly how to

implement the requirement of TEA-21 to select grantees “on a competitive

basis” to FTA’s discretion. However, we do not agree that FTA employed

competitive methods in selecting all Job Access grantees during this

period or that the two-track approach it adopted in implementing the Job

Access program represented a reasonable exercise of agency discretion.

As noted in this report, the competitive selection of grantees necessarily

requires a comparison of applications for available funding against each

other, rather than a mere determination that they meet the criteria for

award. Although DOT asserted that FTA used a competitive selection

process for entities identified in the conference reports accompanying the

fiscal year 2000 and 2001 appropriations acts, DOT officials also stated

that FTA did not compare applications from entities designated in these

conference reports, either to each other or to applications from entities

that were not so designated. Applications from entities designated in the

conference reports were neither scored nor ranked but were selected on

the basis of the conference report language. FTA’s public notices support

this characterization of FTA’s approach. These notices did not describe

FTA’s process for those entities identified in the conference reports as

“competitive”; rather, they distinguished between funds “reserved for

specific projects” and funds “available for competitive award.”

Importantly, FTA’s description of its Job Access formula proposal clearly

stated with reference to the fiscal year 2000 and 2001 conference reports

that “earmarking of funds does not allow for projects to emerge from a

competitive process.” Therefore, DOT has not provided us with any basis

to agree with its view that projects for entities identified in conference

reports were competitively selected or to change our recommendation.

Regarding DOT’s comments concerning the results of our survey of fiscal

year 1999 Job Access grantees, we have incorporated additional

information about the survey in our report. However, the survey does not

show whether FTA implemented the program effectively. Our survey’s
Page 15 GAO-02-213 Welfare Reform

respondents made no statement about FTA’s overall effectiveness in

implementing the program. Instead, respondents generally indicated they

were satisfied or very satisfied with how the program enabled them to help

people get to work. As indicated in appendix III, respondents identified

areas for improvement in the program’s implementation.

TEA-21 requires us to report on DOT’s implementation of the Job Access

program. As discussed in appendix I, we have issued four reports

addressing various aspects of the program since May 1998. In connection

with our last two reviews, we met with FTA officials, grantees, and others

who suggested that funding designations contained in the conference

reports accompanying the Department of Transportation and Related

Agencies Appropriations Acts for fiscal years 2000 and 2001 had a

significant impact on the operation of the program. In addition, in

proposing the allocation of Job Access funds by formula, FTA stated that

the funding designations resulted in many highly worthy applicants not

receiving funding and pointed out that such designations did not allow

some projects to emerge successfully from a competitive process.

Accordingly, this report examines the Job Access program in fiscal years

2000 and 2001.

Specifically, this report addresses (1) how DOT implemented the program

in fiscal years 2000 and 2001, including its response to funding

designations contained in conference reports in those fiscal years; (2) the

impact on the program of DOT’s response to the funding designations; and

(3) whether the manner in which DOT interpreted and applied the

conference report funding designations in fiscal years 2000 and 2001 was

consistent with applicable statutory requirements. To address the first and

second objectives, we interviewed FTA officials, examined Job Access

program documentation, and conducted a mail survey of all of the fiscal

year 1999 Job Access program grantees (see app. III). The rate of response

to our survey was about 83 percent. A detailed description of our scope

and methodology appears in appendix II. We also reviewed the strategic

plans and reports that DOT filed under the Government Performance and

Results Act of 1993. To address the third objective we reviewed the

requirements of TEA-21, the appropriations acts for fiscal years 2000 and

2001, and applicable case law. We also sent a letter of inquiry to FTA to

obtain its explanation of the actions taken in response to the designations

in the conference reports that accompanied DOT’s appropriations acts for

fiscal years 2000 and 2001. Our review focused on FTA’s processes for

implementing the Job Access program. Our objectives did not include

reviewing individual grants made in fiscal years 1999, 2000, or 2001 and the

Scope and

Methodology
Page 16 GAO-02-213 Welfare Reform

associated projects, or individual grant applications under the Job Access

program. We conducted our review from July 2001 through November

2001 in accordance with generally accepted government auditing

standards.

We are sending copies of this report to the cognizant congressional

committees; the Secretary of Transportation; the Administrator, Federal

Transit Administration; and other interested parties. We will make copies

available to others on request. If you have any questions about this report,

please call me at (202) 512-2834 or E-mail me at heckerj@gao.gov. Key

contributors to this report are listed in appendix IV.

JayEtta Z. Hecker

Director, Physical

 Infrastructure Issues
Appendix I: Brief Description of Previous

GAO Reports on the Job Access Program

Page 17 GAO-02-213 Welfare Reform

Without adequate transportation, welfare recipients face significant

barriers in moving from welfare to work. In 1998, Congress found that

three-fourths of welfare recipients lived in central cities or rural areas, but

two-thirds of new, entry-level jobs were located in the suburbs. Public

transportation facilities, such as buses or subways, often offer limited or

no access to many of these jobs. Although the jobs can be reached by car,

many welfare recipients do not have cars. To address this mismatch, the

Transportation Equity Act for the 21st Century (TEA-21) authorized up to

$750 million for fiscal years 1999 through 2003 to implement the Job

Access and Reverse Commute (Job Access) program. The program

authorizes the Department of Transportation (DOT) to provide grants to

local agencies, nonprofit organizations, transit authorities, and others to

improve transportation to employment. Within DOT, the Federal Transit

Administration (FTA) is responsible for implementing the program. From

fiscal year 1999 through 2001, FTA selected Job Access projects for grants

totaling $247 million for 368 Job Access projects.

To date, we have issued four reports on the program: in May 1998—before

the program was established28—as well as in November 1999,29 December

2000,30 and August 2001.31 In May 1998, we reported that the proposed Job

Access program would support reform of the nation’s welfare system by,

among other things, providing additional resources to transport welfare

recipients to work. We recommended that DOT (1) establish specific

objectives, performance criteria, and goals for measuring the program’s

progress; (2) require grantees to coordinate transportation strategies with

local job placement and other social service agencies; and (3) work with

other federal agencies to coordinate welfare-to-work activities. TEA-21

reflected these recommendations and required appropriate action by DOT.

In November 1999, we reported on the implementation of the program in

fiscal year 1999—its first year. We found that DOT had implemented our

second and third recommendations in carrying out TEA-21. DOT had also

taken preliminary steps to implement our recommendation that it

establish specific objectives, performance criteria, and goals for measuring

the program’s progress. However, we also found that DOT’s process for

 28 GAO/RCED-98-161, May 29, 1998.

29 GAO/RCED-00-14, Nov. 26, 1999.

30 GAO-01-133, Dec. 4, 2000.

31 GAO-01-996R, Aug. 17, 2001.

Appendix I: Brief Description of Previous

GAO Reports on the Job Access Program
Appendix I: Brief Description of Previous

GAO Reports on the Job Access Program

Page 18 GAO-02-213 Welfare Reform

selecting Job Access grant proposals was not consistent in fiscal year

1999, and the basis for some selections was unclear.

Our December 2000 report examined DOT’s implementation of the

program in fiscal year 2000. We found that DOT had taken steps to

improve its process for selecting Job Access proposals. For example, to

promote greater consistency in the evaluation and selection of grantees,

DOT developed a standard format for reviewing Job Access proposals and

provided more detailed guidance to its reviewers. Almost 90 percent of the

fiscal year 1999 Job Access grantees that responded to a GAO survey were

satisfied with the goals and intent of the program. However, 51 percent

said that satisfying various standard FTA grant requirements took too

long—about 9 months, on average. As a result, about one-third of

respondents reported experiencing problems in obtaining matching funds.

Also, seven projects were withdrawn (about 4 percent of Job Access

projects) for varied reasons, including, in one case, the loss of matching

funds. Also, DOT implemented our recommendation that it develop

specific objectives, performance criteria, and measurable goals for the Job

Access program by developing an evaluation plan and by requesting

specific data from the grantees. DOT developed a goal to increase new

employment sites by 4,050 in fiscal year 2000 and 8,050 in fiscal year 2001.

Our August 2001 report provided our preliminary observations on (1)

DOT’s proposal to use a formula for allocating grant funds to the states,

(2) the status of obligations for the Job Access program, and (3) DOT’s

plans for reporting on the program to the Congress. At the time of our

report, DOT had proposed a change to the Job Access program, beginning

in fiscal year 2002, under which it would allocate funding to the states via

a formula, instead of to individual grantees. DOT proposed this change in

response to language in the conference reports accompanying DOT’s

appropriations acts for fiscal years 2000 and 2001 that designated Job

Access funding for specific states, localities, and organizations. Second, as

of August 7, 2001, DOT had obligated 94 percent of the funds for fiscal year

1999, 67 percent of the funds for fiscal year 2000, and 20 percent of the

funds for fiscal year 2001. Third, DOT had missed its June 2000 deadline

for a status report to the Congress but expected to report instead in

September 2001. However, as of November 26, 2001, DOT had not sent the

report to Congress.
Appendix II: Objectives, Scope, and

Methodology

Page 19 GAO-02-213 Welfare Reform

TEA-21 requires us to report on FTA’s implementation of the Job Access

program. This report examines (1) how DOT implemented the Job Access

program in fiscal years 2000 and 2001, including its response to funding

designations in conference reports in those fiscal years; (2) the impact on

the program of DOT’s response to the funding designations; and (3)

whether the manner in which DOT interpreted and applied the conference

report funding designations in fiscal years 2000 and 2001 was consistent

with applicable statutory requirements.

To describe FTA’s continued implementation of the Job Access program in

fiscal years 2000 and 2001, we obtained and analyzed documents and

interviewed FTA officials about the agency’s solicitation, selection, and

award procedures and how these were implemented. We also asked

agency management to explain any changes made in the implementation

of the program for projects selected in fiscal years 2000 and 2001.

We examined the consequences of changes in the manner in which FTA

selected Job Access proposals by obtaining and analyzing FTA’s records

regarding projects selected for award during fiscal years 1999 through

2001, including the operating status of the associated projects during those

years and those projects that were withdrawn. In addition, we conducted a

mail survey of the fiscal year 1999 grantees. (See app. III for the

questionnaire and the results.) FTA identified 186 Job Access projects for

fiscal year 1999.32 We mailed questionnaires to each of these grantees and

received responses from 155 of them—a response rate of 83 percent as of

September 30, 2001.

To examine the legality of FTA’s approach to the solicitation and selection

of grantees in fiscal years 2000 and 2001, we reviewed TEA-21, the

appropriations acts for fiscal years 2000 and 2001, and applicable case law.

We also obtained the views of cognizant agency officials. Specifically, we

asked FTA about its legal justification for its approach to implementing

the Job Access program regarding entities identified in the conference

reports accompanying recent DOT appropriations acts. Our examination

 32 When we issued our November 1999 report on DOT’s Job Access program, FTA had

selected 179 projects from among 266 applications and awarded almost $71 million in

grants. This number grew to 194 because some proposals were consolidated, and some

organizations chose to have their own grants rather than participate as subgrantees under

consolidated grants. However, we surveyed organizations representing 186 projects

because several organizations withdrew their projects from the program and did not

receive their grants.

Appendix II: Objectives, Scope, and

Methodology
Appendix II: Objectives, Scope, and

Methodology

Page 20 GAO-02-213 Welfare Reform

was limited to FTA’s processes and did not include a review of awards

designated to particular states, local governments, or organizations.
Appendix III: Survey of Fiscal Year 1999 Access to Jobs Program Grant Recipients

Page 21 GAO-02-213 Welfare Reform

Appendix III: Survey of Fiscal Year 1999

Access to Jobs Program Grant Recipients
Appendix III: Survey of Fiscal Year 1999 Access to Jobs Program Grant Recipients

Page 22 GAO-02-213 Welfare Reform
Appendix III: Survey of Fiscal Year 1999 Access to Jobs Program Grant Recipients

Page 23 GAO-02-213 Welfare Reform
Appendix III: Survey of Fiscal Year 1999 Access to Jobs Program Grant Recipients

Page 24 GAO-02-213 Welfare Reform
Appendix III: Survey of Fiscal Year 1999 Access to Jobs Program Grant Recipients

Page 25 GAO-02-213 Welfare Reform
Appendix III: Survey of Fiscal Year 1999 Access to Jobs Program Grant Recipients

Page 26 GAO-02-213 Welfare Reform
Appendix IV: GAO Contact and Staff Acknowledgments

Page 27 GAO-02-213 Welfare Reform

JayEtta Z. Hecker (202)512-2834

In addition, Sam Abbas, Alan Belkin, Helen Desaulniers, Ernie Hazera,

Alex Lawrence, Bonnie Pignatiello Leer, Sara Ann Moessbauer, LuAnn

Moy, and Frank Taliaferro made key contributions to this report.

Appendix IV: GAO Contact and Staff

Acknowledgments

GAO Contact

Acknowledgments

(392006)
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